This puts the last two weeks at more or less the same level as the weeks before. The 420-430K level appears to be the “new normal” for 2011, a little below the 440-460K level of 2010 but above the 380K range we saw in the first quarter of this year.

Sales of U.S. new homes unexpectedly dropped in July to the lowest level on record, signaling that even with cheaper prices and reduced borrowing costs the housing market is retreating.

Purchases fell 12 percent from June to an annual pace of 276,000, the weakest since data began in 1963, figures from the Commerce Department showed today in Washington. The median price of $204,000 was the lowest since late 2003.

A lack of jobs is hurting Americans’ confidence, leading to a plunge in home demand that threatens to undermine the one-year- old economic recovery. Builders are also competing with mounting foreclosures that are forcing down property values.

Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday.

Writing in his daily briefing to investors, Rosenberg said the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains.

But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg.

Rosenberg calls current economic conditions“a depression, and not just some garden-variety recession,” and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered “euphoric response.”

“Such is human nature and nobody can be blamed for trying to be optimistic; however, in the money management business, we have a fiduciary responsibility to be as realistic as possible about the outlook for the economy and the market at all times,” he said.

The 1929-33 recession saw six quarterly bounces in GDP with an average gain of 8 percent, sending the stock market to a 50 percent rally in early 1930 as investors thought the worst had passed.

“False premise,” Rosenberg said. “And guess what? We may well be reliving history here. If you’re keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3%.”

And let me repeat my own mantra: The Fed can produce new money, but it cannot produce new jobs. Fiscal policy — and its threat of overtaxing, over-regulating, and overspending — is what’s ailing the economy. And that threat is reverberating through stock and bond markets. (The stock market, by the way, is still about 11 percent below its late-April peak.)

The U.S. trade deficit widened unexpectedly to a record 21-month high in June, as imports from its largest trading partners ballooned.

The shortfall in international trade of goods and services surged 19% to $49.90 billion, the Commerce Department said Wednesday. The deficit in May was revised down to $41.98 billion from an initial estimate of $42.27 billion.

Economists surveyed by Dow Jones Newswires had expected the deficit to expand to $42.7 billion in June.

U.S. exports contracted 1.3% to $150.45 billion, from $152.44 billion in May. Imports increased at a faster rate, expanding 3.1% to $200.35 billion from $194.42 billion.

The WSJ’s sidebar comment states

The scariest number is the drop in exports. The nascent recovery in manufacturing was heavily predicated on exports sales. Say goodbye to that hope. Now it will be inventory building and government spending.

And may I remind you, government spending is simply the act of government bureaucracies taking money out of private hands and redistributing it – or worse, printing more paper.